Question

Problem 14-8 On December 31, 2017, Slkyseng Company quired a computer from Pato Cerperation o5,r interst at 12%. The computer is a cted to have a smar Ine and a #26,000 salvage vah. Prepare the journal entry for the purchase on December 31, 2017, (hound present value facter caloulation to deciomal places tiMles and enter o for the are au e. 1.25128 amounts, Cit accoovnt titles are autometically indenend when amount is enteredl. Do nee inentaly Account itles and Explanation Credt December 31, 2017 asswers t use effective interest method n Decesber 31, 2018 (Roo tization (use effective-interest method) on December 31, 2018. (Round answers to O deca titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.) Account Titles and Explanation Debit Credit December 31, 2018 (To record the depreciation.) December 31, 2018 (To amortize the discount.) Schedule of Note Discount Amortizat Debit, Interest Expense Credit, Carrying Amount Discount on Notes Payable Date ol Note 12/31/17 12/31/18 12/31/19 12/31/20 12131/21 Schedule of Note Discount Amortization Debit, Interest Expense Credit, Carrying Amount Discount on Notes Payable Date of Note 12/31/17 12/31/18 12/31/19 12/31/20 12/31/21 Prepare any necessary adjusting entries relative to deprediation and amortization on December 31, 2019. (Round answers to O decimal places, e.g. 38,s account titles are automatically indented when amount is entered. Do not indent manually.) Debit Credit Date Account Titles and Explanation December 31, 2019 (To record the depreciation.) December 31, 2019 Ins, All Rights Reserved. A Division of 2ohn Wiley &SonsIns Prepare any necessary adjusting entries relative to depreciation and amortization on December 31, 2019. (Round answers to o decimal p ccount titles are automatically indented when amount is entered. Do not indent manually,) Date Account Titles and Explanatiorn Debit Credit December 31, 2019 (To record the depreciation.) December 31, 2019 (To amortize the discount.) Click if you would like to Show Work for this question: Open Show Work

Answer 1

Journal entries Schedule of note Discount amortization credit ate Account Title and Explanation Discount on noteCarrying Amount Date $ 413,087 of note DEC 31-2017 Computer Equipment Discount on Note Payable 12/31/2017 $ 2/31/2018 $ 2/31/2019 $ 2/31/2020 $ 12/31/2021 $ $ 236,913 413,087 $650,000 49,570 $ 55,519 $ 62,181 $ 69,643 $ Note Payable 462,657 518,176 580,357 Dec 31 2018 Depreciation expense (413087-76000)/5 $ 67,417 650,000 Accumulated Depreciation $67,417 To record Depreciation 49,570 Dec 31 2018 Interest Expense WORKING NOTES Discounting FACtor@12 $ 49,570 Discount on Note payable to record amortization Of discount Table value Based 0.89286 n= | 4 Years i: 12% Dec 31 2019 Depreciation expense (413087-76000)/5 $ 67,417 0.79719 $67,417 Accumulated Depreciation 0.71178 To record Depreciation 0.63552 $55,519 Face value Dec 31 2019 Interest Expense 650,000 $ 55,519 Discounting Factor Discount on Note payable 0.6355 to record amortization Of discount Present Value 413,087